Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
C.A.5 (Tex.),2009.
McBeth v. Carpenter
565 F.3d 171 United States Court of Appeals,
Appellants.
No. 07-51305.
April 7, 2009.
Background: Limited partners who deposited $800,000 in escrow for purchase of property brought action against
(1) plaintiffs failed to show lost-profit damages with reasonable certainty;
(2) general partner owed plaintiffs the highest fiduciary duty recognized in the law;
(3) defendant limited partners owed fiduciary duties to plaintiffs;
(4) defendants breached their fiduciary duties to plaintiffs; and
(5) defendants defrauded plaintiffs.
170B Federal Courts
170BVIII Courts of Appeals
170BVIII(K) Scope, Standards, and Extent
170BVIII(K)1 In General
170Bk776 k. Trial De Novo. Most Cited Cases
170BVIII(K) Scope, Standards, and Extent
170BVIII(K)1 In General
170Bk763 Extent of Review Dependent on Nature of Decision Appealed from
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
170Bk765 k. Judgment Notwithstanding Verdict. Most Cited Cases
On review of the district court's denial of a motion for judgment as a matter of law, the appellate court uses the same
standard to review the verdict that the district court used in first passing on the motion.
[3] Federal Civil Procedure 170A 2608.1
170A Federal Civil Procedure
170AXVII Judgment
170AXVII(E) Notwithstanding Verdict
170Ak2608 Evidence
170Ak2608.1 k. In General. Most Cited Cases
157XIV Weight and Sufficiency
157k595 k. Inferences from Evidence. Most Cited Cases
A jury may draw reasonable inferences from the evidence, and those inferences may constitute sufficient proof to
support a verdict.
170Bk841 k. Extent of Review in General. Most Cited Cases
Federal Courts 170B 843
170B Federal Courts
[6] Federal Courts 170B 842
170B Federal Courts
170BVIII Courts of Appeals
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
Federal Courts 170B 844
170B Federal Courts
170BVIII Courts of Appeals
170BVIII(K) Scope, Standards, and Extent
170B Federal Courts
170BVIII Courts of Appeals
170BVIII(K) Scope, Standards, and Extent
170BVIII(K)5 Questions of Fact, Verdicts and Findings
170B Federal Courts
170BVI State Laws as Rules of Decision
170BVI(A) In General
170Bk373 k. Substance or Procedure; Determinativeness. Most Cited Cases
A federal court sitting in diversity applies state substantive law.
Limited partners in partnership created to purchase property failed to show lost-profit damages with reasonable cer-
tainty arising from failure to complete the sale, as required to recover such damages under Texas law; although gen-
eral partner subsequently purchased property with different investors and sold it for a profit, this later purchase of
the property was based on different terms, included more acreage, more capital infusion, and less leverage than the
original sales provisions.
115k190 k. Loss of Profits. Most Cited Cases
In Texas, lost profit damages must be established with reasonable certainty.
Under Texas law, lost profit damages may not be based on evidence that is speculative, uncertain, contingent, or
hypothetical.
[12] Damages 115 6
[13] Partnership 289 366
289 Partnership
289VIII Limited Partnership
289k366 k. Relation Between Partners in General. Most Cited Cases
289 Partnership
289VIII Limited Partnership
289k366 k. Relation Between Partners in General. Most Cited Cases
Texas law recognizes fiduciary obligations between limited partners, applying the same partnership principles that
govern the relationship between a general partner and limited partners.
Texas law recognizes damages awards for breach of fiduciary duties owed by limited partners.
[16] Partnership 289 366
289 Partnership
289k366 k. Relation Between Partners in General. Most Cited Cases
Under Texas law, general partner and entities that were limited partners in partnership formed to purchase property
eral partner's control.
[22] Partnership 289 366
289 Partnership
ing the deal, property purchase was delayed and ultimately scuttled due to the ongoing water rights negotiations,
individual limited partners would not have entered the partnership agreement if they had known the full extent of the
property's water rights issues, they relied on general partner's representations that the water rights dispute would not
delay the purchase in making their investment decision, and entities that were limited partners operated under gen-
eral partner's control.
184k3 k. In General. Most Cited Cases
To establish fraud under Texas law, a plaintiff must prove that: (1) the defendant made a material representation that
was false; (2) it knew the representation was false or made it recklessly as a positive assertion without any
knowledge of its truth; (3) it intended to induce the plaintiff to act upon the representation; and (4) the plaintiff actu-
ally and justifiably relied upon the representation and thereby suffered injury.
184k17 k. Duty to Disclose Facts. Most Cited Cases
As a general rule, a failure to disclose information does not constitute fraud under Texas law unless there is a duty to
disclose the information.
[25] Fraud 184 17
184 Fraud
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
170Bk765 k. Judgment Notwithstanding Verdict. Most Cited Cases
On review of the district court's denial of a motion for judgment as a matter of law, the appellate court uses the same
standard to review the verdict that the district court used in first passing on the motion.
[3] Federal Civil Procedure 170A 2608.1
170A Federal Civil Procedure
170AXVII Judgment
170AXVII(E) Notwithstanding Verdict
170Ak2608 Evidence
170Ak2608.1 k. In General. Most Cited Cases
157XIV Weight and Sufficiency
157k595 k. Inferences from Evidence. Most Cited Cases
A jury may draw reasonable inferences from the evidence, and those inferences may constitute sufficient proof to
support a verdict.
170Bk841 k. Extent of Review in General. Most Cited Cases
Federal Courts 170B 843
170B Federal Courts
[6] Federal Courts 170B 842
170B Federal Courts
170BVIII Courts of Appeals
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
Federal Courts 170B 844
170B Federal Courts
170BVIII Courts of Appeals
170BVIII(K) Scope, Standards, and Extent
170B Federal Courts
170BVIII Courts of Appeals
170BVIII(K) Scope, Standards, and Extent
170BVIII(K)5 Questions of Fact, Verdicts and Findings
170B Federal Courts
170BVI State Laws as Rules of Decision
170BVI(A) In General
170Bk373 k. Substance or Procedure; Determinativeness. Most Cited Cases
A federal court sitting in diversity applies state substantive law.
Limited partners in partnership created to purchase property failed to show lost-profit damages with reasonable cer-
tainty arising from failure to complete the sale, as required to recover such damages under Texas law; although gen-
eral partner subsequently purchased property with different investors and sold it for a profit, this later purchase of
the property was based on different terms, included more acreage, more capital infusion, and less leverage than the
original sales provisions.
115k190 k. Loss of Profits. Most Cited Cases
In Texas, lost profit damages must be established with reasonable certainty.
Under Texas law, lost profit damages may not be based on evidence that is speculative, uncertain, contingent, or
hypothetical.
[12] Damages 115 6
[13] Partnership 289 366
289 Partnership
289VIII Limited Partnership
289k366 k. Relation Between Partners in General. Most Cited Cases
289 Partnership
289VIII Limited Partnership
289k366 k. Relation Between Partners in General. Most Cited Cases
Texas law recognizes fiduciary obligations between limited partners, applying the same partnership principles that
govern the relationship between a general partner and limited partners.
Texas law recognizes damages awards for breach of fiduciary duties owed by limited partners.
[16] Partnership 289 366
289 Partnership
289k366 k. Relation Between Partners in General. Most Cited Cases
Under Texas law, general partner and entities that were limited partners in partnership formed to purchase property
eral partner's control.
[22] Partnership 289 366
289 Partnership
ing the deal, property purchase was delayed and ultimately scuttled due to the ongoing water rights negotiations,
individual limited partners would not have entered the partnership agreement if they had known the full extent of the
property's water rights issues, they relied on general partner's representations that the water rights dispute would not
delay the purchase in making their investment decision, and entities that were limited partners operated under gen-
eral partner's control.
184k3 k. In General. Most Cited Cases
To establish fraud under Texas law, a plaintiff must prove that: (1) the defendant made a material representation that
was false; (2) it knew the representation was false or made it recklessly as a positive assertion without any
knowledge of its truth; (3) it intended to induce the plaintiff to act upon the representation; and (4) the plaintiff actu-
ally and justifiably relied upon the representation and thereby suffered injury.
184k17 k. Duty to Disclose Facts. Most Cited Cases
As a general rule, a failure to disclose information does not constitute fraud under Texas law unless there is a duty to
disclose the information.
[25] Fraud 184 17
184 Fraud
